Sports Direct Makes £52M Takeover Bid For Game Digital
Sports Direct says the specialist games retailer will be better off under its corporate umbrella and will be “able to weather the pressures that it is facing”.
Retail mogul and Sports Direct owner, Mike Ashley, is making a bid to acquire Game Digital as part of his company’s ambitious High Street expansion.
Already a massive shareholder in Game, Sports Direct plans to offer 30p per share for the chain under a cash bid. The company recently upped its stake in Game to 38.5% and is now seeking to absorb it into its growing portfolio of acquisitions.
Sports Direct has warned that if the takeover is successful there may be job losses, and said it is likely there will be site closures or mergers with other Sports Direct-owned stores following a review of the business.
This latest move follows a failed attempt by the retail giant to acquire Debenhams. Ashley’s empire has already added a number of floundering companies to its business, including House of Fraser for £90 million and Evans Cycles for £8m.
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Since July 2017, Sports Direct has been Game’s largest investor having wrestled £14m shares from Marlborough. The company has said it does not believe Game can “weather the pressures that it is facing” as a standalone business.
A company statement read: “Sports Direct believes that the offer, in providing Game with the wider benefit of Sports Direct’s operating and other experience and increased support, will secure Game’s future and allow it to navigate these pressures.”
The 30p-a-share bid, it said, was final and represents a 27% premium to Game’s closing price on Tuesday of 23.55p.
In recent years, Game has increasingly struggled in harsh High Street conditions with sales of hardware and consoles hit particularly hard by competition.
Game saw its sales drop 4.7% to £492.9m in its first half, despite a boost from popular games such as Fortnite. However, its interim pre-tax profits jump 20.3% to £14.8m due to cost-cutting and higher margin sales.
Last year, the two retailers entered into a partnership that gave the sportswear retailer the rights to its e-sports ‘Belong’ arenas, a space where gamers can compete against each other in store.